BUDGET 2008: Affordable Housing

Published 13/03/2008

The Government is making further changes to its Open Market HomeBuy scheme to help thousands of people buy their first home.

There are three Open Market HomeBuy products under existing rules – a product in partnership with Nationwide Building Society (Halifax pulled out of the scheme earlier this month), another in partnership with Yorkshire Building Society and a third Government-only product.

The schemes are aimed at social tenants, Key Workers and other priority first-time buyers and each offer homebuyers different levels of equity loan to help fund their purchase. The schemes haven’t been particularly successful so far and the Government has had a tendency to launch new schemes that undermined the previous offerings. As a result, support from mortgage lenders has been understandably weak.

All these schemes will be replaced by two new products from the 1st April. The new products are:

‘MyChoiceHomeBuy’ offers an equity loan of up to 50% of the value of the property, which can be used with any conventional mortgage.

‘Ownhome’ offers an equity loan of between 20% and 40%, with the mortgage being provided by the Co-Operative Bank.

Overall, these new schemes could help more people into home ownership as they offer homebuyers a larger equity loan – the previous maximum was 32.5%. The Government has set itself a target of delivering 70,000 new affordable homes each year by 2010/11 and these new schemes will need to be more popular than their predecessors if this target is to be met.

Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

We're here to offer our customers excellent fee free mortgage advice. Our expert advisers will help you secure the best mortgage deal whether you're a first time buyer, remortgaging your home, buying to let or moving up the property ladder. We'll help you throughout the mortgage process – no hidden costs or surprises, just straightforward, honest, mortgage advice.

Representative example A mortgage of £188,578 payable over 22 years, initially on a fixed rate until 31/12/23 at 2.19% and then on a variable rate of 4.74% for the remaining 17 years would require 62 payments of £900.79 and 202 payments of £1,094.12. The total amount payable would be £276,994 made up of the loan amount plus interest (£88,283) and fees (£133). The overall cost for comparison is 3.7% APRC representative.

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